India's AI-driven tech firings could derail middle class dreams

India's software industry is facing a major challenge as technology changes the way companies operate. Tata Consultancy Services, or TCS, is the largest IT services company in India and employs over 500,000 people. Recently, TCS announced it would cut more than 12,000 jobs, mostly at the middle and senior management levels. This is about 2 percent of its total workforce. The company says it is making these changes to prepare for the future, as it invests in new areas and uses artificial intelligence, or AI, on a large scale.

For many years, Indian IT companies like TCS have relied on hiring skilled workers at lower wages to create software for clients around the world. This business model helped India become a global leader in software services. However, things are changing quickly. AI is now able to do many tasks that people used to do, and clients are asking for more creative and innovative solutions, not just cheaper labor. As a result, companies are letting go of managers and keeping workers who actually do the technical work. There is also a big increase in hiring for new technology areas like AI, cloud computing, and data security, but not enough to make up for all the jobs being lost.

Experts say there is a serious skills gap in India's software industry. As AI becomes more important, companies need workers who understand how to use it. According to the industry group Nasscom, India will need about a million AI professionals by 2026, but less than 20 percent of current IT workers have these skills. Companies are spending more money to train their employees, but those who cannot learn new skills are being let go. This is especially hard for people who have worked in the industry for many years and now find their skills are no longer needed.

The changes in the software industry are having a big impact on India's economy. In the past, IT companies provided good jobs for many young graduates, helping them join the middle class and buy things like cars and homes. But now, the number of new jobs is shrinking. A few years ago, India's top IT companies hired about 600,000 new graduates each year. Now, that number has dropped to about 150,000. Some new sectors, like financial technology startups and global capability centers, are hiring, but not enough to replace all the lost jobs. Experts say that at least 20 to 25 percent of new graduates may not find jobs at all.

Business leaders are warning about the possible effects of these changes. If there are fewer good jobs, people may not buy as many homes or cars, which could hurt other industries. Some believe that if AI continues to replace jobs, many middle-class families could lose their financial security. The future of India's economy depends on how quickly companies and workers can adapt to new technology. If they succeed, India can remain a global leader in technology. If not, many people may struggle to find good jobs and maintain their standard of living.

The situation is also affected by global events. For example, demand for IT services in the United States, which provides half of the revenue for Indian software companies, has slowed down. This is partly because of tariffs and economic uncertainty. As US companies adopt more AI, they are also negotiating for lower costs, which means Indian IT companies have to do more with fewer employees. This has led to job losses in cities like Bengaluru, Hyderabad, and Pune, which were once centers of India's IT boom.

Overall, the rise of AI and changes in the global economy are forcing India's software industry to rethink how it operates. The decisions made now will shape the future of the industry and the lives of millions of workers. Whether India can continue to grow its middle class and keep its economy strong will depend on how well it can adapt to these new challenges.